With banks' fee policies changing faster than Kim Kardashian's marital status, keeping up with all the changes can seem like a full-time job. And how can you choose the best bank for you when you're not even sure which banks charge for debit cards and which still offer completely free checking?
[In Pictures: 10 Ways to Start Earning Extra Money Now]
We spoke with some of the top banking and money experts to get the latest on how to be savvy when choosing a bank account. Here are six of their top tips:
Know your options—and yourself. In general, says Today Show financial editor Jean Chatzky, larger banks offer more ATMs and lower interest rates on savings accounts, while smaller banks might be less convenient but offer lower fees. Meanwhile, online-only banks might be able to offer higher interest rates, but lack the bricks-and-mortar presence, and credit unions often offer lower fees but can have more restrictions such as when you can speak to a customer service rep or visit a teller.
"The question you have to ask as a consumer, is, 'How do I use my bank?' says Chatzky. For example: "Do I care if there's a teller? Do I want to be able to walk in and talk to somebody? How often will I use an ATM and do I care if there's not one where I live and one where I work?" She recommends the comparison tool findabetterbank.com, which makes it easy to search by ZIP code. Other websites, including Bankrate.com and Google Advisor, also offer free customized searches.
Focus on your checking account first. "Your checking account is the centerpiece," says Greg McBride, senior financial analyst at Bankrate.com. "You can always have a savings account elsewhere, and then link it to your checking account." Free checking accounts are still relatively easy to find, although most banks will charge for extra products and services such as a safety deposit box, bounced checks, and withdrawals outside its ATM network. "If you find a free checking account, the only way it will cost you money is if you have sloppy financial habits," says McBride.
Keep your eyes peeled for letters from your bank. That's how banks let you know about any changes to their policies that will affect your accounts, says The 10 Commandments of Money author Liz Pulliam Weston. "Those can be easy to miss, though, so it's not a bad idea to simply call your bank and ask if any new fees are about to apply to your accounts," she says. If new fees are avoidable, such as a charge imposed if your account drops below a minimum balance, perhaps you can put more money into your account or close it altogether.
Don't forget about credit unions. "They are truly local, unlike so many of the other 'too big to fail' banks, and are deeply invested in the communities they serve," says Jude Boudreaux, a certified financial planner in New Orleans.
Consider your travel schedule. If you travel a lot for work and need a bank with branches throughout the country, you probably want to skip the local community bank and go with a big one, says Farnoosh Torabi, author of Psych Yourself Rich, even if it means incurring a few more fees. On the other hand, if you don't rely much on ATMs and the local teller can fill all your needs, a local bank or credit union could work better for you. "The bank's customer service may be unavailable after business hours, but in exchange you may face lower fees," she says.
Stay on top of your own account. When special education teacher Danny Kofke, author of A Simple Book of Financial Wisdom, got hit with a late fee on a credit card payment, he immediately called his bank, a national chain, and explained that he accidentally forgot to pay the bill. The customer service rep immediately agreed to waive the fee, partly because Kofke is a good customer with a strong history of on-time payments and multiple accounts with the bank. "I know I could probably shop around and get better rewards on my credit card, but since we don't have any debt except our mortgage, I find just working with one bank much easier to keep track of," he says.